There’s a good reason to add tax-related dates to your calendar, with plenty of days warning. Inland Revenue charges penalties for late filing and late payments. They also charge penalties if your tax return is wrong, especially if it looks like it was no accident. Here’s a quick rundown of what happens when you stuff up.
Penalties for a late GST return
GST returns are due every two months or six months, depending on the option you chose when you registered. You’ll be charged a penalty for late filing – $50 if you’re on the payments basis; $250 if you’re on the hybrid or invoice basis. The penalty is due for payment before the 28th of the month after the return was due.
Dates for two-monthly GST return and payment
- 28 June For April/May GST
- 28 August For June/July GST
- 28 October For August/September GST
- 15 January For October/November GST
- 28 February For December/January GST
- 7 May For February/March GST
Dates for six-monthly GST return and payment
- 28 October For April/September GST
- 7 May For October/March GST
Penalties for late filing of your income tax return
If you work for yourself, filing your tax return in time is an important part of a healthy relationship with Inland Revenue. Here’s a quick rundown on what form to file, depending on your business structure:
- Sole traders, including freelancers and contractors, need to file an IR3 – the form for an individual tax return.
- If you’re in a partnership, each partner needs to file an IR3 and the partnership needs to file an IR7.
- If you have a company that’s registered with the Companies Office, you need to file an IR4.
- Whatever your business structure, you must also file a copy of your business’s financial records for the relevant financial year or submit an IR10 form summarising your income and expenses.
Dates for your income tax return
The official last chance for filing your return is 7 July.
Penalty amount for late filing
The penalty you could be charged for filing a late return depends on your income. If your business income is less than $100,000, the penalty is $50. If income is between $100,000 and $1million, it’s $250.
Penalties for late payment of tax
If you’re late paying your income tax, Inland Revenue is required to send you a reminder before imposing a penalty. The reminder will include the last-chance date. After that, a late payment penalty will apply. Here’s how the penalties roll out:
- The first late payment penalty is 1% of the amount owing.
- If you don’t pay the first penalty within seven dates (dates or days??) of the due date, a further 4% penalty is imposed.
- After that, a late payment penalty of 1% is added every month until you pay.
If you’re worried you won’t be able to pay your tax bill on time, call Inland Revenue on 0800 377 772 to see how they might be able to help.
Penalties for forgetting to file employment information
You need to file employment information within two working days of each payday. If you’re late or forget to file, the penalty is either $250 or $1 for each person employed during the month (whichever is greater).
Inland Revenue will send you a reminder for the first and second time you forget. If you’re late for a third time within 12 months, there’s no reminder and the penalty will be charged automatically.
Penalties for underpaying income tax
If you underpay tax because your tax return is wrong, you might be charged a penalty. The reasons Inland Revenue give for charging penalties are:
- Failure to take reasonable care to meet your tax obligations. The penalty is 20% of the tax shortfall.
- An unacceptable tax position, when you make a decision related to tax that is more likely to be wrong than right. The penalty is 20% of the tax shortfall.
- Gross carelessness, when you’ve taken no care with managing your tax. The penalty is 40% of the tax shortfall.
- An abusive tax position, where you interpret tax laws with a primary purpose of taking tax positions that reduce or remove tax liabilities. The penalty is 100% of the tax shortfall.
- Tax evasion, where you’ve been purposefully trying to avoid paying tax or you take a refund that you know you’re not entitled to. The penalty is 150% of the tax shortfall.
For more detail about penalties for underpaying income tax, visit Inland Revenue.
Jail time for serious offences
In serious cases, a tax crime means jail time. Serious crimes include not keeping records for your business, not giving Inland Revenue the information they require (including tax returns and forms), providing false or misleading information, taking a refund you’re not entitled to, avoiding the assessment or payment of tax and manipulating electronic data.
Asking for leniency
Inland Revenue is not heartless. You can ask them to waive a payment penalty for late filing or late payment if you have a reasonable excuse. They’ll be more likely to be lenient if you’ve made a genuine mistake or were given wrong advice by Inland Revenue’s own team.
Get Afirmo and stay cool with Inland Revenue
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